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Thomas
Thomas, Lawyer
Category: UK Property Law
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Experience:  BA (Hons), PgDip, Practising Solicitor
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Tenancy Agreement

Resolved Question:

I am about to enter tenancy agreement - can I check some clauses with you?


 


In particular this rent arrangement - is it fully and irrevocably enforceable in totally binding way?


 


RENT  £950.00 (nine hundred and fifty pounds) per calendar month for the first year of the term and then for each successive year the said rent plus by way of additional rent an amount equal to five times the amount of the increase in the Official Retail Price Index (RPI) as a percentage of the total of the said rent plus the sum of the annually additional cumulative rent amounts as calculated on each anniversary of this agreement such increments to be cumulative year on year

Submitted: 2 years ago.
Category: UK Property Law
Expert:  Thomas replied 2 years ago.
Hi,

Of course. Please let me have the details of the clauses you are concerned about and I shall advise.

Make sure you omit personal details.

Tom
Customer: replied 2 years ago.

TERM a fixed term of five years from the seventh of January 2013


 


RENT £950.00 (nine hundred and fifty pounds) per calendar month for the first year of the term and then for each successive year the said rent plus by way of additional rent an amount equal to five times the amount of the increase in the Official Retail Price Index (RPI) as a percentage of the total of the said rent plus the sum of the annually additional cumulative rent amounts as calculated on each anniversary of this agreement such increments to be cumulative year on year


 


Is this legally binding on all parties for term and rent??

Expert:  Thomas replied 2 years ago.
Hi

Thanks for your patience .

The clause means that each year you will pay 950gbp plus five times the increase in the RP1 index. So ,if the RPI increases by 0.5% then you will pay 2.5% of the rent for the previous year (ie. 11, 400.00) which would work out at an additional 250gbp for the year.

These amounts would be added each year for the purpose of working out the following years amount to pay.

If you do not like the uncertainty of it I would say that you would only take the flat if you can agree now in advance how much the rent is to be for the following years, so that you have some certainty over how much you are going to pay and avoid any potential errors in calculation.

IT could be potentially an unfair clause under the consumer contract legislation, not the element linking it to RPI but the fact that it is five times the increase in RPI, but to be honest youwould still have to burn time arguing the fact that it is unfair so I would press for fixed increases now.

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Kind regards,


Tom
Customer: replied 2 years ago.


Tom


 


Thanks, XXXXX XXXXX would it be unfair if I've expressly agreed it? Also you didn't answer is this five year term legally binding - so there is no way for me to terminate or exit the agreement?


 


If I did argue 5 x RPI was unfair despite signing it (it is because he is starting with heavily discounted rental) would I stand much chance?


 


Martin

Expert:  Thomas replied 2 years ago.
Martin,

The five year term will be binding, no question.

The consumer contract legislation is in place to prevent consumers being exploited by unfair terms, but my point is that you should avoid relying on this because it's a last resort.

If they disputed that it was unfair then you would have to litigate over it. Litigation is expensive and uncertain, so why expose yourself to the risk, hassle and expense of litigation if you can agree otherwise.

You may stand a reasonable chance arguing it, but much less so if the rent is heavily discounted because this would be taken in to account in determining whether or not the clause is unfair for the purpose of the legislation.

Please remember to rate my answer.

Kind regards

Tom
Customer: replied 2 years ago.


OK


 


So I would be liable to pay for 60 months rent irrespective?


 


And how would they determine if rent were reasonable?


 


Martin

Expert:  Thomas replied 2 years ago.
Hi Martin,

If you were to terminate the agreement during the term then you would get sued for the whole amount of the rent, but they would probably only get judgement on the amount of rent that you should have paid from the date you left until the date at which the property could have been relet + damages/legal expenses.

The question of whether it's fair or not would be determined in litigation having regard to the market value of non-discounted rent, RPI behaviour, industry practices and whether the clause itself is written in plain intelligable language. It's complicated because you would both call evidence and experts and then the judge would make an order based on the evidence. That is what I mean by avoiding relying on the unfair consumer contracts legsilation and the litigation that you potentially invite, it's a nightmare (believe me).

Please rate my answer.

Tom
Customer: replied 2 years ago.

OK.


 


The landlord is saying that if he couldn't relet it or no-one was interested at the rate I was paying that he would sue me for the whole amount of the outstanding rent - is this true?


 


Is the clause clear to u - it is to me so I don't believe I have defence over the wording?


 


 

Expert:  Thomas replied 2 years ago.
Martin,

He would not get the whole of the remaining amount of the term, because he is under an obligation to mitigate his losses. He could charge a lower rent without the RPI clause to induce interest and mitigate that way. If he gets less rent than he would have from you then there he can argue for an award of money to compensate.

You have to try an understand there are no hard and fast determinations of what you will be liable for because there are many factors that will be considered in litigation .You should not enter the tenancy agreement if you think you will end up litigating basically.

The clause is clear enough so this alone would not provide a defence in my view.

Please rate my answer.

Tom
Customer: replied 2 years ago.


OK. but if he couldnt get another tenant I'd be liable every month?


 


I understand your point re not having defence, but just want to be clear.

Expert:  Thomas replied 2 years ago.
Hi,

In theory yes, but this happens very, very rarely.

Please rate my answer now.

Tom
Customer: replied 2 years ago.


I'm sorry I'm confused. What is point of 5 yr binding term if I can get out of it by saying "I'll walk " and if you don't let it for 2 years I'm still not going to pay? It doesn't make sense to me?

 

Please explain?

Expert:  Thomas replied 2 years ago.
Martin,

I am sorry for the delay in replying. I had an unplanned visit to the vets last night and was not at home for the rest of the evening.

You can't "get out of it". If you leave the tenancy during the fixed term without the landlord's consent then he will sue you for the whole of the rent.

The court will enter judgement against you for an amount of money. The amount will up to the amount of the rent you would have paid from the time you left until the end of the term, plus damages plus legal expenses (which may be considerable).

Whether the judgement amount is the whole remainder of the term or just, say, three months depends on many factors that cannot be conclusively determined until litigation and the particular circumstances.

I cannot put it simpler or plainer and have certainly answered your question with a leval of detail in excess of your deposit. Please rate my answer now.

Kind regards.

Tom
Thomas, Lawyer
Category: UK Property Law
Satisfied Customers: 6466
Experience: BA (Hons), PgDip, Practising Solicitor
Thomas and 5 other UK Property Law Specialists are ready to help you
Expert:  Thomas replied 2 years ago.
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